ONE reason why American health-care costs got so high is that the American hospital was so well organized for making money. Entrepreneurial coalitions of highly trained managers and savvy physicians alertly searched out every opportunity to maximize the revenues that brought them more money and power. Japan was different. It is not that Japanese physicians and others in the health-care system were more altruistic and less interested in money or power. They simply were more amateurish – or, to look beyond personality, they grew up in a more structured and regulated system, where the payoffs for entrepreneurship were limited, and the penalties for bumbling along were minor.

How did this system come about? Was it a far-sighted design on the part of the Japanese government, or more a story of conflict and compromise? The first half of this chapter is a brief history of how the health-care delivery system developed in Japan. The latter half is an overview of Japanese providers, illustrated by describing six prototypes. We then explore the cost implications of the Japanese pattern of health-care provision, with a few possible lessons for the United States. The key question of whether costs have been controlled in the Japanese system at the expense of quality will be taken up in Chapter 7, after taking a look at other aspects of the Japanese system.